A THEORETICAL AND EMPIRICAL INVESTIGATION OF THE SUPPLY RESPONSE IN THE U.S. BEEF-CATTLE INDUSTRY
David Aadland (),
DeeVon Bailey () and
No 21887, 2000 Annual meeting, July 30-August 2, Tampa, FL from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)
This paper investigates the response of beef cattle producers to changes in the price of cattle. Previous research has suggested that there may be a negative short-run supply response to a permanent increase in the price of cattle. We build a dynamic, rational expectations model that predicts that the supply response is generally positive, even for permanent shocks in the short run, and nests the negative supply response as a special case for appropriately restricted demand shocks. Using annual US time series data (1930-1997) and a simultaneous-equations econometric approach, we find a positive short-run supply response in the cow market and mixed evidence in the heifer market.
Keywords: Demand and Price Analysis; Livestock Production/Industries (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea00:21887
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